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Showing 261 to 280 of 1440 Records
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2023 (5) TMI 1180
Revision u/s 263 - LTCG chargeable in India - tax treaty entitlement, - whether the assessee is a resident for tax purposes? - CIT was of the view that the Ld. AO did not carry out factual inquiry/verification to ascertain that the assessee is a genuine investor or not and he should have called for and verified the details of key personnel who manage the investment decisions of the fund - whether appellant is not entitled to the benefit of India-Mauritius Double Taxation Avoidance Agreement (India- Mauritius DTAA)? - HELD THAT:- AO communicated the reasons for selection of case and sought the explanation of the assessee - there is no Linkling in the assessment order as to what explanation was given by the assessee. The assessment order only mentions that the assessee filed details. What details were filed is not forthcoming from the assessment order. However, the details examined by the Ld. AO are not known.
No reasons have been recorded by him to arrive at the conclusion that income returned by the assessee at Rs. Nil is acceptable and conforms to the legal position. Nothing is discernable as to how the issues raised were examined and found acceptable by him. In such a scenario wherein the assessment is completed without any enquiry/verification of the issues involved, in Gee Vee Enterprises vs. Addl. CIT [1974 (10) TMI 29 - DELHI HIGH COURT] that the assessment order is erroneous as also prejudicial to the interests of revenue as it caused prejudice to revenue administration as emphasised in Venkatakrishna Rice Co. [1981 (3) TMI 1 - MADRAS HIGH COURT] - Therefore, we are of the view that the CIT was justified in resorting to the provisions of section 263 of the Act. Decided against assessee.
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2023 (5) TMI 1179
Income escaping assessment - Validity of Assessment concluded without issuing a valid statutory notice u/s 143(2) - return filed pursuant to the notice issued under section 148 - HELD THAT:- In the present case, undisputedly no return of income was originally filed by the assessee, and only pursuant to the notice issued under section 148 of the Act the assessee filed its return of income on 31/03/2011. Thus, the first notice dated 20/02/2011 under section 143(2) of the Act was issued when no return of income was available on record and therefore, this notice cannot be said to have been issued to verify whether the assessee has understated the income or has computed excessive loss or under-paid the taxes in any manner. Hence the first notice issued u/s143(2) of the Act in the present case is a mere empty formality, without any legal consequence, and therefore, cannot be treated as a notice on a return filed by the assessee.
As in DIT v/s Society for Worldwide Interbank Financial, Telecommunications[2010 (4) TMI 43 - DELHI HIGH COURT] held that the provisions of section 143(2) make it clear that the notice can only be served after the AO has examined the return filed by the assessee. Thus, first notice issued under section 143(2) is not a valid notice as per the provisions of the Act.
Also since the return of income was filed by the assessee on 31/03/2011, therefore, the time limit for issuance of notice under section 143(2) of the Act, as per proviso to clause (ii), was available only till 30/09/2011. Second notice under section 143(2) of the Act was issued on 17/10/2011, i.e. beyond the time limit prescribed under the provisions of section 143(2) of the Act. Therefore, the second notice is also invalid as per the provisions of section 143(2) of the Act.
In any case, it cannot be disputed that the AO in the present case has accepted the return of income filed by the assessee and has concluded the assessment under section 143(3) read with section 147 of the Act. Further, the mandatory requirement of issuance of notice under section 143(2) of the Act is quite clear from the decision of the Hon’ble Supreme Court in ACIT vs Hotel Blue Moon[2010 (2) TMI 1 - SUPREME COURT]
Since in the present case, no valid notice under section 143(2) of the Act was issued by the AO and the assessment was completed without following the mandatory requirement of the Act, therefore, the entire assessment proceedings concluded under section 143(3) read with section 147 of the Act is rendered null and void, and is accordingly quashed. Decided in favour of assessee.
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2023 (5) TMI 1178
Deemed dividend u/s 2(22)(e) - Director on company holding substantial shareholding in the assessee company as well another company - CIT-A deleted the addition - HELD THAT:- CIT(A) is not correct in deleting the addition in the hands of the assessee, observing that the addition is to be made in the hands of the Director of the Company who is common shareholder of both companiesy when the Hon’ble Supreme Court has doubted the decision of the Delhi High Court in the case of Ankitech Pvt. Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT] and referred it to the Larger Bench of the Hon’ble Supreme Court to re-look into the entire issue.
The issue is not fully settled by Hon’ble Supreme Court that too when later judgment of the Hon’ble Supreme Court has referred the issue to the Larger Bench. Thus the Ld. CIT(A) is not correct in taking a decision with that of the previous judgment of the Hon’ble Supreme Court in the case of Madhur Housing And Development Company [2017 (10) TMI 1279 - SUPREME COURT] Therefore we hereby set aside the matter back to the file of the Ld. CIT(A) who is to decide the issue - Ground raised by the Revenue are hereby allowed for statistical purposes.
Addition - delayed deposit of service tax - as per CIT-A service tax collected by the assessee was deposited before the due date of filing of the return - HELD THAT:- This amount was already offered for taxation in the subsequent assessment year i.e. 2012-13. Thus, CIT(A) directed the AO to verify the same and if it is found that the assessee has already offered this amount as income in the subsequent year, the income of that year be reduced by disallowance made u/s 43B. Decided against revenue.
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2023 (5) TMI 1177
Deduction u/s 80P - interest income received from the co-operative bank - AO denied the deduction claimed by the assessee u/s 80P by applying the provisions of section 80P(4) since the assessee is providing credit facilities to its members - HELD THAT:- Section 80P(4) is of relevance only in a case where the assessee, who is a co-operative bank, claims a deduction under section 80P - we find no merits in the aforesaid reasoning adopted by the learned CIT(A) in denying deduction under section 80P(2)(d) of the Act to the assessee.
In a recent decision in PCIT vs Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. [2023 (5) TMI 372 - SC ORDER] held that a taxpayer who is merely giving credit to its members cannot be said to be the Co-operative Banks/Banks under the Banking Regulation Act and the banking activities under the Banking Regulation Act are altogether different. Therefore, held that the assessee, a co-operative credit society, could not be termed a bank/co-operative bank and that being a credit society, it was entitled to exemption under section 80(P)(2) of the Act. Thus, there is also no basis in the finding of the AO that section 80P(4) is applicable to the assessee.
Regarding the claim of deduction under section 80P(2)(d) of the Act, it is also pertinent to note that all co-operative banks are co-operative societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the co-operative banks is allowable as a deduction under section 80P(2)(d) of the Act.
Thus we uphold the plea of the assessee and direct the AO to grant deduction under section 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with co-operative bank. Decided in favour of assessee.
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2023 (5) TMI 1176
Bogus purchases - estimation of income - Sales Tax Department has proved beyond doubt that the parties declared as hawala traders were involved in providing accommodation entry of purchases and the assessee was one of the beneficiary - as per CIT only profit percentage has to be added and estimated @ 6% of bogus purchases - HELD THAT:- We find the Jurisdictional Hon’ble High Court in the case of Pooja Paper Trading Co. [2019 (3) TMI 62 - BOMBAY HIGH COURT] and Simit P Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] has considered the profit element and the income was estimated.
CIT(A) took a reasonable view that the only profit percentage has to be added and estimated @ 6% of bogus purchases. DR could not controvert the findings of the CIT(A) with any new cogent evidence and material to take a different view. CIT(A) dealt on the facts and considered the profit element in the bogus purchases and also the A.O has not disputed the sales - Decided against revenue.
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2023 (5) TMI 1175
Unexplained cash credit - unexplained income - contention of assessee that cash deposit was out of cash withdrawal - As per revenue only source of income shown by the assessee is agriculture income , which may have been used for house hold purpose - HELD THAT:- Assessee except contending that the assessee has sufficient cash balance for making deposit in bank, has not explained the real source of cash and cheque deposits. We find that the assessing officer in his summary has clearly demonstrated the cheque deposits and immediate withdrawal or on deposits of money in cash immediately transferred by way of cheque, the assessee has failed to give any satisfactory reply against the finding of the assessing officer.
As in full agreement with the observation of the assessing officer that the assessee has only shown source of income from agriculture activities. keeping in view the general practice in society that ordinarily peoples keep certain money in cash, therefore, by giving such benefits the assessee is granted benefit of Rs. 2,80,000/- and remaining addition of Rs. 22,00,000/- is upheld. Appeal of assessee is partly allowed.
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2023 (5) TMI 1174
Addition u/s 69A - cash deposit unexplained - HELD THAT:- We find force in the contention of assessee that although originally after receipt of cash of Rs. 40 lakh, Rs. 20 lakh each were deposited to the joint bank account of assessee and his wife & Shri Dinesh their son but at the time of returning the cash Shri Dinesh was away from home therefore this amount was completed from withdrawals from the joint bank account of assessee and his wife.
As assessee has successfully demonstrated with supporting evidence source of cash deposit to his bank account during FY 2010-11 relevant year under consideration and therefore no addition was required to be made in the hands of assessee and therefore we allow the grounds of assessee on merits and direct to delete the entire addition.
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2023 (5) TMI 1173
Addition u/s 41(1) - Cessation of liability for sundry creditors - assessee failed to prove the credit balance of these two parties - AO found discrepancies from the information received from creditors which were received against the notices issued u/s 133(6) vis-à-vis assessee’s books of accounts - HELD THAT:- Admittedly, this is not a case of doubtful expenditure. It is a case where on calling of information by ld. AO from the two creditors, there appears to be a difference in the balance confirmed by the creditors vis-à-vis reported by the assessee in its audited financial statements.
Assessee has duly acknowledged its debt and has not done anything to write off its liability as cessation thereof - Assessment of the assessee has been completed u/s 143(3) by the same incumbent AO for AY 2012-13 wherein these balances of the two creditors continuing from AY 2010-11 had been accepted and no additions made thereon. Also, assessee has placed on record the invoices which were raised in respect of these two liabilities and respective ledge accounts from its audited books of accounts. We are in agreement with these submissions so made by assessee and therefore, delete the additions so made. Accordingly, the ground taken by the assessee is allowed.
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2023 (5) TMI 1172
Weighted deduction on R&D expenditure claimed u/s 35(2AB) - Claim denied for want of requisite approval received from DSIR - HELD THAT:- In the present case, no doubt, expenditure had been incurred on R&D, however, the requisite approval u/s 35(2AB) was obtained from the prescribed authorities, as evident from the assessment order. No doubt, the assessee company had filed an application for seeking the extension of such approval. Such extension was denied by the prescribed authorities on account of fact that the assessee company had not adhered to the prescribed conditions. This denial of extension was communicated to the AO by the prescribed authorities. If the appellant is aggrieved by the denial of extension of approval u/s 35(2AB), the only course of action available to the appellant is to invoke writ jurisdiction of the Hon’ble High Court. Thus, the material on record clearly indicates that there was no requisite approval as envisaged u/s 35(2AB), which is condition precedent for availing the benefit of deduction u/s 35(2AB)
As settled principle of construction while construing the provisions of exemption, the provisions should be construed strictly as laid down by the Constitution Bench of the Hon’ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs Dilip Kumar & Company & Others [2018 (7) TMI 1826 - SUPREME COURT] - Decided against assessee.
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2023 (5) TMI 1171
Revision u/s 263 by CIT - Debatable issue - admissibility of LTCL on securities - whether long term capital loss on securities (STT paid) can be adjusted against the non-STT paid long term capital gain resulting from securities or other assets? - whether the carrying forward of such loss is admissible? - HELD THAT:- We find merit AR argument that AO has taken one of the tow possible view while framing the assessment u/s 143(3) accepting the claim of the assessee in which the long term capital loss (STT paid) has been allowed to be set off and carried forward for future set off.
The issue is debatable one and therefore jurisdiction u/s 263 of the Act is not available to PCIT in the case of debatable issue. As in the case of Kishorebhai Bhikhabai Virani [2015 (2) TMI 807 - GUJARAT HIGH COURT has been referred to by the Co-ordinate Benches namely Raptakos Brett & Co. Ltd. [2015 (6) TMI 529 - ITAT MUMBAI] and M/s Rare Investments [2019 (11) TMI 634 - ITAT MUMBAI] and after considering the same, the issue was decided in favour of the assessee.
On the issue of non-availability of jurisdiction u/s 263 in case of debatable issue, we find support from the decision of Malabar Industrial Co. Ltd.[2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that jurisdiction u/s 263 of the Act cannot be assumed in respect of a debatable issue which is reiterated in the case of CIT vs. Max India Ltd. [2007 (11) TMI 12 - SUPREME COURT] - The case is also supported by the decision of Sunil Lamba [2019 (3) TMI 1254 - DELHI HIGH COURT] where referring to the two decisions of the Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd. (supra) and Max India Ltd. (supra) quashed the order passed u/s 263 of the Act on the ground that the issue is debatable one and ld PCIT has no jurisdiction. Assessee appeal allowed.
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2023 (5) TMI 1170
Exemption u/s 11 - denial of claim while processing return u/s 143(1) on the reason that assessee has not filed the audit report in form No.10B along with return of income - HELD THAT:- The assessee stated before us that the medical emergency of the trustee is a reason for delay in filing the audit report in form no.10B along with return of income. Admittedly, the assessee filed the return of income on 10.1.2018, wherein assessee enclosed the income and expenditure account and balance sheet and statement of income which are dated 1.1.2018. When the assessee was in a position to get audited its books of accounts and filed the audited income and expenditure account and balance sheet along with statement of income, how it was not able to file the audit report in form no.10B is not explained.
Assessee has taken the support of petition filed for condonation of delay in filing the appeal before this Tribunal dated 18.1.2023 so as to explain the delay in filing audit report in form no.10B along with return of income. Assessee has not separately explained this delay in filing the audit report in form no.10B along with return of income with any reasonable causes. Having said this, we are of the opinion that there is no good and sufficient reason to condone the delay in filing the audit report in form no.10B along with return of income - Lower authorities are justified in denying the exemption u/s 11 of the Act to the assessee in view of the non-filing of audit report in form no.10B along with return of income.Decided against assessee.
If the exemption u/s 11 is denied for non-filing of audit report in form no.10B, the assessee’s income is to be computed in accordance with law as “business income” and gross income of the assessee cannot be taxed by the AO - Once the exemption claimed by the assessee u/s 11 of the Act has been denied, the income of the assessee has to be assessed as “business income” and assessee is entitled for all usual deductions under the provisions of the Act while computing the income of the assessee under the head “business”, more so, deduction u/s 30 to 38 of the Act it has to be allowed. In view of this, we direct the AO to tax only the net income of the assessee after granting all usual expenditure u/s 30 to 38 of the Act and not gross income of the assessee. Ordered accordingly.
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2023 (5) TMI 1169
Disallowance u/s 14A - assessee made suo-moto disallowance u/r 8D(2)(iii) after taking into account only those investments which actually yielded exempt income in calculating amount of average investment - as per CIT-A only those investments on which exempt income has been earned in the year under consideration can only be considered for computation of disallowance under Rule 8D as relying on ACB India Ltd case [2015 (4) TMI 224 - DELHI HIGH COURT] - HELD THAT:- No error or infirmity in the order of the Ld.CIT(A) and find no justification to interfere with the order of the Ld.CIT(A) . Accordingly, the Ground No. 1 of the Department is dismissed.
Disallowance as prior period expenses - AO made the disallowance by relying upon the order passed in the preceding years in the Assessee’s own case - CIT(A) had deleted the addition of the preceding years by relying on the decision of the Tribunal in Assessee’s own case [2014 (11) TMI 1174 - ITAT DELHI] - HELD THAT:- No justification to interfere with the order of the Ld.CIT(A). Accordingly, the Ground No. 2 of the Department is dismissed.
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2023 (5) TMI 1168
Seeking direction to the Respondent No. 1-Directorate of Revenue Intelligence (DRI) and its officers to permit the presence of his Advocate during the interrogation and recording of statements at visible but not audible distance - seeking permission to record his voluntary statement in his own handwriting - HELD THAT:- The Calcutta High Court in the case of ENFORCEMENT DIRECTORATE VERSUS PARTHA CHATTERJEE [2022 (7) TMI 1412 - CALCUTTA HIGH COURT], followed the decision of the Delhi High Court in the case of DIRECTORATE OF ENFORCEMENT VERSUS SATYENDAR KUMAR JAIN [2022 (6) TMI 382 - DELHI HIGH COURT] and held that the allegation against the E.D. that the Advocate of the accused was not allowed to be present at the time of raid is found to be false and the order permitting the presence of lawyer was set aside.
The decisions of the other High Courts have taken a view that the presence of lawyer cannot be insisted as a matter of right. However, the decisions have a persuasive value and is not binding upon this Court. The decision of the Apex Court in the case of VVIJAY SAJNANI & ANR. VERSUS UNION OF INDIA & ANR. [2012 (4) TMI 706 - SUPREME COURT] as well as the decision of Coordinate Benches of this Court, are binding which have permitted the presence of a lawyer at visible but not audible distance.
Thus, the direction which has been sought by the Petitioner as regards the presence of the lawyer at visible but not audible distance is an aspect of fair investigation and we do not find any reason to take a different view from the view taken by the Coordinate Benches of this Court - petition allowed.
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2023 (5) TMI 1167
Maintainability of revenue’s appeal - time limitation - Refund of 4% additional duty of customs paid - review order as required under Sub Section (2) of Section 129D of Customs Act, 1962 has been passed by the Reviewing Authority beyond the period of three months as envisaged under Sub Section (3) of Section 129D of Customs Act, 1962 - HELD THAT:- Similar appeals had come up for hearing before the Tribunal wherein the Commissioner (Appeals) had dismissed appeals filed by Department on the ground of being time barred. In those cases also it was urged by the Department that the seal impressed on the Order-in-Original by the Reviewing Cell would establish that the order was received by the Reviewing Authority on a much later date. The Tribunal after considering the submissions made by the learned AR and perusing the records observed that there was no reason to disbelieve, the observation made by the Commissioner (Appeals) that there was no evidence available before him as to the date on which the Reviewing Authority received the order - Reliance can be placed in the case of COMMISSIONER OF CUSTOMS (EXPORTS) , CHENNAI VERSUS M/S. VCR TIMBER ENTERPRISES AND M/S. MEHNDIPUR BALAJI IMPEX (P) LTD. [2023 (3) TMI 1082 - CESTAT CHENNAI] where it was held that It is opined that the seal seen affixed on the photo copy of the Orders-in-Original found in the annexure to the appeal filed by the department, purporting to show the date of receipt of the order in the review section, to be suspect - the strong inference that can be drawn is that there was no evidence available to establish as to the date on which the order-in-original was received by the Review Cell and apparently there was a delay in passing the review order.
In some appeals there is no seal affixed on the Order-in-Original but it is merely stated in the grounds of appeal that the order was received by the Reviewing Authority on a much later date. The Tribunal in a similar matter in COMMISSIONER OF CUSTOMS (EXPORTS) , CHENNAI VERSUS M/S. NAGAPPA EXPORTS, M/S. AMARA RAJA BATTERIES LTD. AND M/S. NORITSU KOKI CO. LTD. [2023 (3) TMI 1216 - CESTAT CHENNAI] has held that As there is no evidence to substantiate the contention of the Department that the Order-in-Original was received on such dates by the Review Cell and as there is no reason to dis-believe the findings of the Commissioner (Appeals) that there was no evidence as to the date on which Order-in-Original was received by the Reviewing Authority, the strong inference that can be drawn is that there is a delay in passing the review orders in these appeals.
There are no ground to take a different view. The impugned orders passed by the Commissioner (Appeals) are sustained - appeal of Revenue dismissed.
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2023 (5) TMI 1166
Revocation of Customs Broker License - Forfeiture of Security deposit - levy of penalty - imputation and articles of charge, for breach of regulation 10, 11(a), 11(b), 11(d), 11(e), 11(m) and 11(n) of Customs Broker Licensing Regulations, 2013, in connection with the handling of 66 packages of ‘readymade garments’ for export to Sudan and Nigeria - time-lines prescribed in Customs Brokers Licensing Regulations, 2013 had not been complied with or not - HELD THAT:- It would appear that the licensing authority has assumed that the order of the Hon’ble High Court of Bombay in THE PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) MUMBAI VERSUS UNISON CLEARING PVT. LTD., AND OTHERS [2018 (4) TMI 1053 - BOMBAY HIGH COURT] had, in fact, shifted the commencement of ‘time-lines’ and, thereby, precluded challenge to non-adherence thereof. This is far from a correct appreciation of the decision of the Hon’ble High Court.
It is also seen that the articles of charges against the appellant can be perceived as being in two spheres with one necessarily following from the other. The primary charge is that the appellant has been in breach of regulation 10 of Customs Broker Licensing Regulations, 2013 requiring the licence to be operated only by the licencee or his authorized person/employee which the inquiry authority, on the basis of certain facts and circumstances as well as statements of two persons said to be employees of M/s Millenium Freight Forwarders, concluded as having been ‘sublet’ or otherwise transferred. The findings on the other charges, relating to obligations devolving upon customs brokers, held against the appellant herein is inevitable consequence of the finding on the primary charge. Accordingly, it would be appropriate to examine the sustaining of the primary charge and only proceed to look at the submissions in relation to other charges upon such being so.
The impugned order has arraigned the appellant on the other charge of not knowing the customer upon the foundation that the licence had been ‘sub-let’ to the two persons. It is alleged that the customs broker had granted access of the credentials, necessary for undertaking customs clearance, to persons not in their employment. The submission of customs broker, and not controverted in the impugned order, that access was provided only to privately sourced software used for compilation of data to be filed under ICEGATE strikes at the very root of the allegation of illicit grant of access. Hence, the conclusion that the appellant had not obtained authorization from the customer is a conclusion that may not sustain - Breach of regulation 11(d) and 11(e) of Customs Broker Licensing Regulations, 2013 has been alleged on the finding of export processing having been handled by M/s Millenium Freight Forwarders Pvt Ltd but their operation as possible intermediary between the appellant and the exporter is no ground to hold that the processes were carried out through a person other than themselves. Accordingly, the finding against the appellant on these two charges will not sustain.
The findings, insofar as the alleged breach of regulation 11(m) of Customs Broker Licensing Regulations, 2013 by not verifying antecedents and correctness of the import-export code (IEC) and other details is concerned, is also based entirely on the role played by M/s Millenium Freight Forwarders Pvt Ltd as ‘sub-let’ owner of the licence. It has been held that the two employees of the appellant were, in fact, employees of the M/s Millenium Freight Forwarders Pvt Ltd and, in view of the finding on the issue of ‘subletting’ as well as the employment of the said two persons and in the light of the uncontroverted finding that the two employees have not dealt with the export consignment, it cannot be said that this Regulation had been breached by the appellant.
Consequently, none of the charges stand proved against the appellant. It is also taken note of that the impugned order has chosen to examine certain other cases pertaining to allegations levelled against the present appellant which is not in conformity with Customs Broker Licensing Regulations, 2013; for a licensing authority to go beyond the articles of charge framed and to seize upon extraneous incidents, to the extent that the outcome of those proceedings remain unknown, is tantamount to extraneous influencing of the proceedings under Customs Broker Licensing Regulations, 2013 that does not behove appropriate discharge of responsibilities by the licensing authority.
There are no reason for the continuation of revocation of the licence or forfeiture of the security deposit - the impugned order set aside - appeal allowed.
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2023 (5) TMI 1165
Recovery of dues - direction to Recovery Officer, DRT, Bangalore to comply with the directions of the Hon'ble Division Bench - direction to R-3 to associate with the Official Liquidator to bring the properties for sale and then to take his portion of outstanding dues on the sale proceeds as per law or otherwise - seeking permission to Official Liquidator to engage the services of ITCOT for valuing the assets of the company in liquidation - conduct of sale through public auction by giving vide publicity in the newspapers - meeting out the expenses in connection with sale.
HELD THAT:- It is relevant to mention herein that when the applicant Tungbhadra Sugar Works Limited, being a third party, was not impleaded as a party respondent in the proceedings before the Supreme Court, the applicant, giving reasons for the delay and also proving their ownership over the properties, filed applications for impleadment before the Supreme Court stating that they were ready to settle the dues of the workers, creditors and other statutory dues and that the management was taking necessary actions for revival of the company for the welfare of 947 workmen. Accepting their case that the applicant was a necessary party and was ready to settle the dues of the workmen, creditors and other statutory dues and the management was also taking necessary actions for revival of the company for the welfare of 947 workmen, the Supreme Court allowed the impleadment applications. In the meanwhile, the debts of Tapti Machines Private Limited were later assigned to MTitanium Apartments Private Limited vide the deed of assignment dated 06.01.2012.
The motto of justice is to resolve the dispute and give a quietus to the problem once and for all. In the case on hand, when the Official Liquidator was appointed by the Court to resolve the disputes of the secured creditors, borrowers, workmen and the other creditors, peculiarly, the disputes between the creditors and the borrowers have been resolved. Evidently the borrower, having accepted the settlement, has given their acceptance in writing that there is no dispute pending between them. Secondly, the evidence with regard to the settlement of disputes of the workmen also has been enclosed showing that the claims and the dues payable to the workmen also have been settled and the workmen have also reached a settlement before the Assistant Labour Commissioner, Mangalore. But the only objection raised by the Official Liquidator shows that these settlements have not been effected through him. It is true that the Official Liquidator has been appointed to resolve the disputes.
It may be restated that when Tungbhadra Sugar Works Limited addressed a letter to the State Bank of Mysore for creation of mortgage by deposit of title deeds in respect of the loans of Deve Sugars Limited, the applicant has confirmed that even after the execution of the agreement dated 15.01.1994, the execution of the conveyance deeds for transfer of properties in favour of Deve Sugars Limited have not been completed yet. In the meanwhile, since the agreement for transfer dated 15.01.1994 was cancelled on 30.09.1998, the rights and liabilities sought to be created by the sale agreement have become non est in the eye of law.
The following directions are thus issued:-
(i) The applicant, Tungbhadra Sugar Works Limited has settled the debts of Deve Sugars Limited, the company in liquidation to the Pegasus Assets Reconstruction Private Limited and on receipt of the entire moneys, they have also returned the title deeds of the properties.
(ii) Since the charge against the company has been completely lifted, the applicant, Tungbhadra Sugar Works Limited is entitled to the possession of the land including the plant and machinery morefully described in the Schedule to the Judge's summons.
(iii) The first respondent, Official Liquidator is, accordingly, directed to handover the possession of the land, building, plant and machinery morefully described in the Schedule to the Judge's summons to the applicant, Tungbhadra Sugar Works Limited. Consequently, an injunction order is granted restraining the first respondent from in any manner interfering with the right of enjoyment of the applicant to the schedule mentioned properties.
(iv) Since the workmen's dues have also been settled by the applicant, as indicated above, the first respondent is hereby directed to pay the arrears of rent of the warehouse, after deducting the security expenses incurred for maintaining the properties, including the balance funds available, to the applicant within a period of four weeks from the date of receipt of a copy of this order.
Application allowed.
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2023 (5) TMI 1164
Requirement of maintenance of books of accounts - respondent can call upon the petitioner to provide the books of accounts for the period beyond the period of eight years or not (for financial years 2010-11 and 2011-12) - Section 128(5) of the Companies Act - HELD THAT:- The learned SPP for the CBI has now taken a plea per proviso to sub- Section 5 Section 128 of the Companies Act they have the power to ask the petitioner to provide the books of account prior to the period mentioned in sub-section. However, a bare perusal of the proviso would show it requires a direction by the Central Government to the company to keep the books of account for a longer period as it may deem fit. Admittedly, no such direction was ever passed per proviso to Section 128(5) of the Companies Act.
The petition stands allowed in terms of prayer a of the petition on the plea the petitioner does not have any books of account beyond the period of eight years viz. for the financial year 2010-11 and 2011-12. The respondent is at liberty to take further action in accordance with law, since the investigation is still going on. The petitioner shall continue to cooperate in the investigation.
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2023 (5) TMI 1163
Oppression and mismanagement - Consent Terms provided for acquisition of the entire shareholding - strict compliance with non-compete obligations.
It is contended that Consent Terms are in the nature of compromise decree and NCLT has jurisdiction to execute the Consent Terms under section 424 of the Companies Act, 2013, but before execution and passing of the Impugned Order, it should have looked into alleged breach of the non-compete obligations under the Consent Terms, should have adjudicated upon.
HELD THAT:- As provided in clause 4, a sum of Rs.2,23,00,000 is to be paid on the final execution of the Consent Terms immediacy and the balance Rs. five crores was to be paid in five equal instalments of Rs. one crore each on various dates between 30.4.2019 and 31.8.2019 respectively. It is also clear that the payment of Rs.7.23 crores against gratuity, salary, non-compete compensation and amicable settlement compensation are to be paid independent of the payment towards shares held by Mukund Muley and his wife Arati Muley entailing in consequent to the payments by the Appellants to them. Clause 7 of the Consent Terms provide that in the event there is any default by any party, the Consent Terms will cease to be binding on the non-defaulting party, but without prejudice to this condition, in case of breach of non-compete obligation by the Respondents (R-1 and R-2), R-1 and R-2 shall be liable to return the amounts paid towards non-compete compensation and amicable settlement compensation. Thus, it is clear that the non-compete obligation and related compensation has been given a special position in the Consent Terms, and significant amount has been provided to be paid to R-1 in compliance of the non-compete obligation.
NCLT is bound by law to execute its order/decree if called upon to do so, and that it has the power to execute an order under section 424(3) of the Companies Act, 2013. Further, as has been held in the judgment in the matter of M/s. Greisheim GmbH vs. Goyal MG Gases Pvt. Ltd. [2022 (1) TMI 1312 - SUPREME COURT] a litigant is entitled to receive the fruits of decree, which in the present case is amount of Rs. 28.77 crores against sale/transfer of their shareholding by the Respondents in addition to certain other payments. It, therefore, becomes abundantly clear that NCLT has not erred in taking action for execution of the Consent Terms which were taken on record and approved by the NCLT.
The facts of the case make it clear that the company Cotmac took unilateral action for termination of Consent Terms after it alleged breach of non-compete obligation by R-1, but it did not approach the NCLT for clarification or definite decision on breach of terms and conditions of the Consent Terms as it was required to do. Such an action by the Company and the Appellants fall short of the clause 27 of the Consent Terms and therefore the breach of Consent Terms by R-1 and R-2 remained mere allegation by one of the parties - since the breach of Consent Terms were not established by the Appellants, as was required under clause 27 of the Consent Terms, the NCLT moved correctly by considering the Execution Application filed by the Respondents.
In view of the fact that the Consent Terms were agreed to by the rival parties to ensure that the Company continues to function as a healthy, viable and active company, the issue of execution of the Consent Terms in entirety should also be looked at by the NCLT upon an application to be made by any of the parties to the Consent Terms - it would be just and proper that when the shares of A-2 and A-3 are sold by the Company pursuant to execution of Consent Terms, the first right of purchase of those shares are given to A-2 and A-3, so that the possibility of the Company falling in the hands of its competitors/rivals is obviated. This would be in keeping with the objective of the Consent Terms and would take care of the interests of the company.
There is no error in the Impugned Order of the NCLT, and the Impugned Order is maintained with the following clarification/direction:
(i) Only such number of shares out of the attached shares of A-2 and A-3 shall be sold by which the requisite amount of Rs.28,77,51,750 plus interest @ 10% p.a. for the period of delay in payment, keeping in mind the date/schedule of various instalments payments included in the Consent Terms is realized and paid to R-1 and R-2. The remaining shares shall be released to remain in the ownership of A-2 and A-3.
(ii) In para 12 of the Impugned Order, the NCLT has kept the issue of enforcement of other prayers made in the Execution Application open and still to be adjudicated upon. It may endeavour to do so as early as possible.
Appeal dismissed.
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2023 (5) TMI 1162
Condonation of delay - inordinate delay in approaching the Tribunal - As decided by SAT there is an inordinate delay in approaching the Tribunal with no adequate reason to condone the delay at this belated stage - HELD THAT:- We find no error in the order of the Securities Appellant Tribunal, Mumbai.
Appeal is accordingly dismissed. Pending application, if any, stands disposed of.
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2023 (5) TMI 1161
Grant of anticipatory bail - recovery under Section 66 of IBC against the persons who, prima facie, appear to be primarily responsible for the fraudulent affairs of the corporate debtors - HELD THAT:- In the name of seeking a clarification, the endeavor of the applicant herein is to indirectly get over with the judgment and order dated 18.01.2023 in WP(C) (PIL) 04 of 2023 passed by Tripura High Court in [2023 (1) TMI 921 - TRIPURA HIGH COURT]. Such an endeavor, in the guise of a clarification, cannot be permitted.
The Tripura High Court has rightly relied upon the observations made by this Court in a binding precedent, in Usha Ananthasubramanian Vs. Union of India [2020 (2) TMI 1081 - SUPREME COURT], which pertains to a matter under Section 339(1) of the Companies Act, 2013 which is pari materia with Section 66 of IBC. The High Court in the case of Sudipa Nath [2023 (1) TMI 921 - TRIPURA HIGH COURT] has rightly observed that an application under Section 66(1) by the resolution professional would not bar any civil action in accordance with law, either at the instance of resolution professional or liquidator or by the corporate debtor in its new avatar on a successful CIRP for recovery of any dues payable to the corporate debtor by such organization / legal entities. Such legal action is independent of Section 66(1).
It is for the Resolution Professional or the successful resolution applicant, as the case may be, to take such civil remedies against third party, for recovery of dues payable to corporate debtor, which may be available in law. The remedy against third party, however, is not available under Section 66 of IBC, and the civil remedies which may be available in law, are independent of the said Section.
The application for clarification is wholly misconceived and, accordingly, stands dismissed.
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